2018 (5) TMI 1961 - HC - Income Tax

Validity of reopening of assessment u/s 147 - proceeding initiated against the assessee by the Directorate of Revenue Intelligence on the allegations of evasion of import duty - HELD THAT - On near identical facts, similar proceeding was sought to be initiated against a partner of the assessee firm for the same assessment year. Both the Commissioner and the Tribunal, however, found that no re-assessment proceeding could be initiated merely because of action taken by the Customs Department. We also had the occasion to examine similar issue for the same assessment year concerning an associate firm of the assessee, M/s. More International 2018 (2) TMI 1929 - CALCUTTA HIGH COURT and we upheld the order of the Tribunal in that appeal. In our judgment, the reasoning of the Tribunal in the decision which we upheld is also almost identical to that in the present case, in relation to the order appealed against. So far as the present appeal is concerned, no distinguishing feature has been brought to our notice by Mr. Chowdhury which could persuade us to take a different view. - Decided in favour of assessee.

Summary

Issues:
Delay in filing the appeal, validity of reopening assessment under Sections 147 and 143(3) of the Income Tax Act, 1961, applicability of Commissioner's sanction under Section 149 read with Section 151, dismissal of appeal based on previous judgments.

Delay in Filing Appeal:
The judgment begins with an application seeking condonation of a 171-day delay in filing the appeal. The Respondent/Assessee's Counsel agrees to the disposal of the application without filing an affidavit. The Court, after reviewing the reasons for the delay, allows the application and condones the delay, subsequently moving to hear the appeal itself without the preparation of a paper book.

Validity of Reopening Assessment:
The appeal challenges a Tribunal decision invalidating a proceeding under Section 147 read with Section 143(3) of the Income Tax Act, 1961. The Assessing Officer had added a substantial amount to the Assessee's total income and initiated penalty proceedings based on the suspicion of income tax evasion linked to a Directorate of Revenue Intelligence investigation. The Court notes that similar proceedings against a partner of the Assessee and an associate firm had been dismissed previously, finding no valid reason for reassessment solely based on Customs Department actions. The Court upholds its previous judgment in a related case and dismisses the present appeal due to the lack of distinguishing features.

Applicability of Commissioner's Sanction:
The Assessing Officer sought Commissioner's sanction under Section 149 read with Section 151 of the Act for reopening the assessment, citing the belief that income chargeable to tax had escaped assessment. However, both the Commissioner and the Tribunal found that Customs Department actions alone were insufficient grounds for initiating reassessment proceedings. The Court's decision is influenced by its previous rulings on similar cases, emphasizing consistency in its approach to such matters.

Dismissal of Appeal Based on Previous Judgments:
The Court dismisses the appeal based on its previous decision in a related case (ITAT No. 353 of 2016) where similar issues were addressed. The Court finds no compelling reason to deviate from its earlier judgment and, therefore, upholds the dismissal of the present appeal. A stay petition related to the appeal is also dismissed, and no costs are awarded in the matter.

In conclusion, the judgment addresses the delay in filing the appeal, the validity of reopening the assessment under relevant sections of the Income Tax Act, the necessity of Commissioner's sanction, and the impact of previous judgments on the present case. The Court's decision to dismiss the appeal is based on the consistency of its rulings in similar matters, emphasizing the need for substantial grounds beyond Customs Department actions to warrant reassessment proceedings.